Post-programme surveillance report. Spain, Autumn 2017

Abstract

This eighth surveillance report provides an assessment of Spain's economic and financial situation following its exit from the financial assistance programme in January 2014. A team from the European Commission (EC), in liaison with staff from the European Central Bank (ECB), carried out the eighth post-programme surveillance visit to Spain on 16-18 October 2017. The European Stability Mechanism (ESM) participated in the meetings on aspects relating to its own Early Warning System. The report focuses on macroeconomic and financial sector developments, complementing the surveillance by the Commission under the macroeconomic imbalances procedure, the Stability and Growth Pact and, more broadly, the European Semester of economic policy coordination. After accelerating in the first half of 2017, GDP growth is expected to ease but remain strong over the next two years. Economic activity is driven by strong domestic demand, in particular private consumption, but net exports are also giving a firmly positive contribution to growth. Real GDP growth is projected to decelerate over the medium term, but remain above the EU average. Job creation is also expected to moderate, but remain solid, and unemployment will continue to decline. Inflation, after picking up in the first half of this year due to the increase in oil prices, is expected to moderate over the coming quarters. Although market tensions in response to recent events in Catalonia have remained contained, the risk exists that future developments could have a negative impact on growth, the size of which cannot be anticipated at this stage.